Paul Graham knows a few things about startups and founders. In 2005, the venture capitalist cofounded Y Combinator, a startup accelerator that’s helped Airbnb, Stripe, and other tech companies take off.
On Saturday, Graham mused about why some entrepreneurs succeed and others don’t.
“Someone asked me what was the most luck-dependent thing in startups. I replied: whether you’re suited for it. Only a tiny fraction of people are,” he tweeted.
When asked to describe in a single word the key characteristic, he replied, “determined,” noting that it’s “very common” for someone who is suited for launching startups to “only succeed on the third or fourth try.”
But, he added, it isn’t obvious who has this quality. “If it were,” he noted, “YC would have a much higher success rate.”
One Twitter user asked, “Are you saying that this is something that you can’t change? Something you can’t get better at?”
Graham replied, “If you’re suited for it, you can get better at doing it. But you can’t get significantly better at being suited for it.”
In the case of Airbnb, the determination of its founders impressed Graham more than their business idea. Brian Chesky, Joe Gebbia, and Nathan Blecharczyk launched the company in 2008 but were rejected by venture capitalists. Graham, too, was skeptical of the idea that people would invite strangers to stay in their home.
But then Graham got a glimpse into the founders’ determination. Faced with rejection from potential backers, now-CEO Chesky and his partners had instead raised funds from their own customers by selling them $40 cereal boxes. The team custom-designed and hand-glued the boxes to feature then-presidential candidates Barack Obama and John McCain, offering them as a breakfast option to Airbnb customers, some of the first of whom were people attending the Democratic and Republican national conventions. The boxes proved popular and sold unexpectedly well.
As Chesky recalled at a recent Stanford Graduate School of Business event, Graham asked the founders about the boxes at the end of their interview, which had gone badly. They replied, “This is how we funded the company because no other investors gave us money.”
Graham was suddenly impressed. “Well if you can figure out how to get people to pay $40 for a $4 box of cereal, maybe, just maybe, you can convince strangers to live with each other,” he told them.
Y Combinator then invested in Airbnb, which today has a market cap of nearly $70 billion.
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Paul Graham, a venture capitalist and one of the founders of Y Combinator, one of the most successful startup accelerators and investors in the world, recently touts the importance of one crucial characteristic possessed by successful startup founders that most people lack.
Graham discussed the topic during an extensive interview with him and the former editor of Wired, John C. Abell, at the invitation of Y Combinator President Sam Altman. When asked what sets a successful startup founder apart from other people, Graham replied that the number one trait he has seen in successful startup founders is “grit,” defined as passion and perseverance in pursuit of a task or goal, often in the face of difficult odds.
Graham said, “Startup founders need to be passionate about their idea and put in the long hours necessary to bring that idea to fruition. Most people don’t have the effort and drive to do this and typically quit when things become tough.” He also remarked that when the odds are stacked against startup founders, having strong grit becomes even more important. He concluded by saying that having grit is the essential quality needed to make a startup successful.
Graham’s comments should ring true to any aspiring startup founders – if they want to succeed, they must have the determination, resilience, and commitment found in the top successful entrepreneurs. With these qualities, a founder can differentiate him/herself from the pack and increase the chances of achieving his/her goals.